Form 8-K REX ENERGY CORP For: Nov 09
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 9, 2015
Rex Energy Corporation
(Exact name of registrant as specified in its charter)
Delaware | 001-33610 | 20-8814402 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
366 Walker Drive
State College, Pennsylvania 16801
(Address of Principal Executive Office and Zip Code)
(814) 278-7267
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On November 9, 2015, Rex Energy Corporation (Rex Energy) issued a press release announcing its operational and financial results for the third quarter 2015 and fourth quarter production guidance. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information under this heading, including the related Exhibit 99.1, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth in such a filing.
Item 7.01 Regulation FD Disclosure.
On November 9, 2015, Rex Energy made available on its website the Rex Energy Corporate Presentation November 2015. Rex will also make available a slide deck for the Rex Energy Third Quarter 2015 Conference Call prior to the conference call on November 10, 2015. Both of these presentations can be accessed by going to www.rexenergy.com, selecting the Investor Relations tab, and then selecting the Events & Presentations tab. The presentations will be available on the companys website until the next regular update.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit |
Exhibit Title | |
99.1 | Press Release of Rex Energy Corporation dated November 9, 2015. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
REX ENERGY CORPORATION | ||||||||
Date: November 9, 2015 | By: | /s/ Jennifer L. McDonough | ||||||
Name: | Jennifer L. McDonough | |||||||
Title: | Sr. Vice President, General Counsel and Secretary |
EXHIBIT INDEX
Exhibit |
Exhibit Title | |
99.1 | Press Release of Rex Energy Corporation dated November 9, 2015. |
Exhibit 99.1
Rex Energy Reports Third Quarter Operational and Financial Results
| Production of 194.3 MMcfe/d, a 15% increase year-over-year |
| Drilled all planned 2015 wells in the Moraine East Area |
| Placed Patterson 2H into sales, the companys first dry gas Utica well in the Western Lawrence Utica |
STATE COLLEGE, Pa., November 9, 2015 (GLOBE NEWSWIRE) Rex Energy Corporation (Nasdaq: REXX) announced its third quarter 2015 operational and financial results.
Commenting on the quarter, Tom Stabley, Rex Energys President and CEO, said, We have continued to improve our drilling operations by lowering costs and increasing work efficiencies. The average well cost for a 5,000 foot lateral in Butler is now down to $5.2 million. Our average drilling rate for the last eight wells was 595 feet per day, as compared to a rate of 402 feet per day for the first nine wells in 2015, an improvement of 48%. With the exceptional performance of our operations team combined with well performance, and the nature of our rock in Butler County, we have been able to increase our overall reserves profile. Cost containment and operational efficiencies are positioning us to weather the low commodity price environment.
Third Quarter Financial Results
Operating revenue from continuing operations for the three and nine months ended September 30, 2015 was $37.6 million and $137.5 million, respectively, which represents a decrease of 49% and 40% from the same periods in 2014, respectively. Commodity revenues, including settlements from derivatives, were $52.6 million and $176.6 million for the three and nine months ended September 30, 2015, a decrease of 31% and 21% respectively from the comparable periods in 2014. Commodity revenues from oil and natural gas liquids (NGLs), including settlements from derivatives, represented 48% of total commodity revenues for the three months ended September 30, 2015.
Including the effects of cash settled basis hedges, the companys basis differential for its Appalachian Basin assets averaged approximately ($0.82) off the average Henry Hub price of $2.77 for the three months ended September 30, 2015.
LOE from continuing operations was $30.6 million, or $1.71 per Mcfe for the quarter. For the nine months ended September 30, 2015, LOE was approximately $90.3 million, or $1.66 per Mcfe. Cash general and administrative (G&A) expenses from continuing operations, a non-GAAP measure, were $5.5 million for the third quarter of 2015, a 39% decrease on a per unit basis as compared to the same period in 2014. For the nine months ended September 30, 2015, cash G&A expenses from continuing operations were $18.7 million, a 43% decrease on per unit basis as compared to the same period in 2014.
The company incurred a non-cash impairment charge of approximately $139.8 million during the third quarter of 2015. The reduction in carrying value, which was primarily focused in the companys Warrior North assets in Carroll County, Ohio and its conventional oil assets in the Illinois Basin, is attributable to the continued depression of current and estimated future commodity prices.
Net loss attributable to common shareholders for the three months ended September 30, 2015 was $97.1 million, or $1.80 per basic share. Net loss attributable to common shareholders for the nine months ended September 30, 2015 was $272.5 million, or $5.07 per basic share. Adjusted net loss, a non-GAAP measure, for the three months ended September 30, 2015 was $13.9 million, or $0.26 per share. Adjusted net loss for the nine months ended September 30, 2015 was $31.7 million, or $0.59 per share.
EBITDAX from continuing operations, a non-GAAP measure, was $16.4 million for the third quarter of 2015 and $68.2 million for the nine months ended September 30, 2015.
Reconciliations of adjusted net income (loss) to GAAP net income (loss) from continuing operations before income taxes, EBITDAX to GAAP net income (loss) and cash G&A to GAAP G&A for the three months and nine months ended September 30, 2015, as well as a discussion of the uses of each measure, are presented in the appendix of this release.
Production and Price Realizations
Third quarter 2015 production volumes were 194.3 MMcfe/d, an increase of 15% over the third quarter of 2014, consisting of 116.6 MMcf/d of natural gas and 12.9 Mboe/d of oil, condensate and NGLs (including 4.6 Mboe/d of ethane). Oil, condensate and NGLs (including ethane) accounted for 40% of net production for the third quarter of 2015.
Including the effects of cash-settled derivatives, realized prices for the three months ended September 30, 2015 were $50.03 per barrel for oil and condensate, $2.57 per Mcf for natural gas, $16.99 per barrel for NGLs (C3+) and $7.33 per barrel for ethane. Before the effects of hedging, realized prices for the three months ended September 30, 2015 were $40.01 per barrel for oil and condensate, $1.74 per Mcf for natural gas, $10.17 per barrel for NGLs (C3+) and $7.22 per barrel for ethane.
Including the effects of cash-settled derivatives, realized prices for the nine months ended September 30, 2015 were $52.92 per barrel for oil and condensate, $2.67 per Mcf for natural gas, $20.25 per barrel for NGLs (C3+) and $7.01 per barrel for ethane. Before the effects of hedging, realized prices for the nine months ended September 30, 2015 were $43.04 per barrel for oil and condensate, $1.99 per Mcf for natural gas, $15.83 per barrel for NGLs (C3+) and $6.82 per barrel for ethane.
Third Quarter 2015 Capital Investments
For the third quarter of 2015, the company made operational capital investments of approximately $37.1 million, of which $33.5 million was used to fund Marcellus and Ohio Utica operations and $3.6 million was used to fund conventional drilling, water flood enhancement and facility upgrades in the Illinois Basin. The Marcellus and Ohio Utica capital investment funded the drilling of 10.0 gross (6.9 net) wells, fracture stimulation of 11.0 gross (5.6 net) wells, placing nine gross (3.8 net) wells into sales and other projects related to drilling and completing wells in the Appalachian Basin.
Investments for leasing and property acquisition were $5.0 million and capitalized interest was $2.0 million for the third quarter of 2015.
Operational Update
Appalachian Basin Butler Operated Area
In the Butler Operated Area, the company drilled 9.0 gross (5.9 net) wells in the third quarter of 2015, with 10.0 gross (4.6 net) wells fracture stimulated and eight gross (2.8 net) wells placed into sales. The company had 11.0 gross (7.3 net) wells drilled and awaiting completion as of September 30, 2015.
Appalachian Basin Moraine East Area
In the Moraine East Area, the company has completed drilling the four-well Fleeger 2 pad. The four wells were drilled to an average lateral length of approximately 6,500 feet are expected to be completed in the fourth quarter of 2015 and placed into sales in late 2015 or early 2016, as the necessary infrastructure comes into service.
Appalachian Basin Western Lawrence Utica
In the Western Lawrence Utica, the company has placed into sales the Patterson 2H well which was drilled to a lateral length of approximately 6,700 feet and completed in 45 stages with average sand concentrations of 2,365 pounds per foot. The well produced at a 24-hour sales rate of 11.4 MMcfe/d.
Liquidity Update
As of September 30, 2015, the company had approximately $3.2 million of cash and $69.0 million of its $350.0 million borrowing base outstanding under its senior secured credit facility. During the third quarter of 2015, the company completed the sale of Keystone Clearwater Solutions and received reimbursement for previous pipeline expenditures in Moraine East for combined net proceeds of $71.1 million.
Fourth Quarter and Full Year 2015 Guidance
Rex Energy is providing its guidance for the fourth quarter and maintaining its full year 2015 guidance ($ in millions). Fourth quarter production is expected to be down approximately 4% at the midpoint of guidance due to the Bluestone processing facility being shut down for six days during the quarter to allow for the commissioning of the Bluestone III processing facility and the shut-in of the six-well Grunder pad in order for the company to drill the Grunder North 6H from the existing pad. The cumulative effect of these two factors is expected to impact production by approximately 8.0 MMcfe/d. Adjusting for these two factors at the midpoint of the companys guidance, estimated production during the quarter would be flat as compared to the third quarter of 2015.
In addition, the company is increasing its full year 2015 operational capital expenditure budget to approximately $160 million. The increase in the budget is due to the companys decision to drill three additional wells and to add three wells to its completion schedule, both in the Butler Operated Area, to take advantage of increased operational efficiencies and accelerate the HBP program.
4Q2015 | Full Year 2015 | |||
Production |
183.0 - 191.0 MMcfe/d | 193.0 - 203.0 MMcfe/d | ||
Lease Operating Expense |
$30.0 - $33.0 million | | ||
Cash G&A |
$6.3 - $7.3 million | | ||
Operational Capital Expenditures(1)(2) |
| $160 million |
(1) | Land acquisition expense and capitalized interest are not included in the operational capital expenditures budget |
(2) | Continuing operations only |
Conference Call Information
Management will host a live conference call and webcast on Tuesday, November 10, 2015 at 10:00 a.m. Eastern to review third quarter 2015 financial results and operational highlights. The telephone number to access the conference call is (866) 437-1772.
About Rex Energy Corporation
Rex Energy, headquartered in State College, Pennsylvania, is an independent oil and gas exploration and production company operating in the Appalachian and Illinois Basins within the United States. The companys strategy is to pursue its higher potential exploration drilling prospects while acquiring oil and natural gas properties complementary to its portfolio.
Forward-Looking Statements
Except for historical information, statements made in this release, including those relating to the timing and nature of development plans; drilling and completion schedules; anticipated fracture stimulation activities; expected dates for availability and infrastructure and placement of wells into sales; and our financial guidance for fourth quarter and full year 2015 are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may contain words such as expected, expects, scheduled, planned, plans, anticipates or similar words. These statements are based on managements experience and perception of historical trends, current conditions, and anticipated future developments, as well as other factors believed to be appropriate. We believe these statements and the assumptions and estimates contained in this release are reasonable based on information that is currently available to us. However, managements assumptions and the companys future performance are subject to a wide range of business risks and uncertainties, both known and unknown, and we cannot assure that the company can or will meet the goals, expectations, and projections included in this release. Any number of factors could cause our actual results to be materially different from those expressed or implied in our forward looking statements, including (without limitation):
| economic conditions in the United States and globally; |
| domestic and global demand for oil, NGLs and natural gas; |
| volatility in oil, NGL, and natural gas pricing; |
| conditions in the domestic and global capital and credit markets and their effect on us; |
| the adequacy and availability of capital resources, credit, and liquidity including, but not limited to, access to additional borrowing capacity; |
| new or changing government regulations, including those relating to environmental matters, permitting, or other aspects of our operations; |
| the geologic quality of the companys properties with regard to, among other things, the existence of hydrocarbons in economic quantities; |
| uncertainties inherent in the estimates of our oil and natural gas reserves; |
| our ability to increase oil and natural gas production and income through exploration and development; |
| drilling and operating risks; |
| the success of our drilling techniques in both conventional and unconventional reservoirs; |
| the success of the secondary and tertiary recovery methods we utilize or plan to employ in the future; |
| the number of potential well locations to be drilled, the cost to drill them, and the time frame within which they will be drilled; |
| the ability of contractors to timely and adequately perform their drilling, construction, well stimulation, completion and production services; |
| the availability of equipment, such as drilling rigs, and infrastructure, such as transportation, pipelines, processing and midstream services; |
| the effects of adverse weather or other natural disasters on our operations; |
| competition in the oil and gas industry in general, and specifically in our areas of operations; |
| changes in our drilling plans and related budgets; |
| the success of prospect development and property acquisition; |
| the success of our business and financial strategies, and hedging strategies; and |
| uncertainties related to the legal and regulatory environment for our industry, and our own legal proceedings and their outcome. |
The company undertakes no obligation to publicly update or revise any forward-looking statements. Further information on the companys risks and uncertainties is available in the companys filings with the Securities and Exchange Commission.
* * * * *
For more information contact:
Investor Relations
(814) 278-7130
REX ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
($ in Thousands, Except Share and Per Share Data)
September 30, 2015 (Unaudited) |
December 31, 2014 | |||||||
ASSETS | ||||||||
Current Assets |
||||||||
Cash and Cash Equivalents |
$ | 3,150 | $ | 17,978 | ||||
Accounts Receivable |
29,138 | 43,936 | ||||||
Taxes Receivable |
19 | 504 | ||||||
Short-Term Derivative Instruments |
29,194 | 29,265 | ||||||
Inventory, Prepaid Expenses and Other |
2,169 | 3,403 | ||||||
Assets Held for Sale |
| 34,257 | ||||||
|
|
|
|
|||||
Total Current Assets |
63,670 | 129,343 | ||||||
Property and Equipment (Successful Efforts Method) |
||||||||
Evaluated Oil and Gas Properties |
1,202,256 | 1,079,039 | ||||||
Unevaluated Oil and Gas Properties |
288,800 | 322,413 | ||||||
Other Property and Equipment |
45,930 | 46,361 | ||||||
Wells and Facilities in Progress |
125,153 | 127,655 | ||||||
Pipelines |
14,275 | 15,657 | ||||||
|
|
|
|
|||||
Total Property and Equipment |
1,676,414 | 1,591,125 | ||||||
Less: Accumulated Depreciation, Depletion and Amortization |
(631,977 | ) | (366,917 | ) | ||||
|
|
|
|
|||||
Net Property and Equipment |
1,044,437 | 1,224,208 | ||||||
Deferred Financing Costs and Other Assets - Net |
16,271 | 17,070 | ||||||
Equity Method Investments |
| 17,895 | ||||||
Long-Term Derivative Instruments |
11,749 | 4,904 | ||||||
Long-Term Deferred Tax Asset |
10,648 | 8,301 | ||||||
|
|
|
|
|||||
Total Assets |
$ | 1,146,775 | $ | 1,401,721 | ||||
|
|
|
|
|||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities |
||||||||
Accounts Payable |
$ | 29,551 | $ | 53,340 | ||||
Current Maturities of Long-Term Debt |
668 | 1,176 | ||||||
Accrued Liabilities |
51,964 | 59,478 | ||||||
Short-Term Derivative Instruments |
763 | 421 | ||||||
Current Deferred Tax Liability |
10,648 | 8,301 | ||||||
Liabilities Related to Assets Held for Sale |
| 25,115 | ||||||
|
|
|
|
|||||
Total Current Liabilities |
93,594 | 147,831 | ||||||
Long-Term Derivative Instruments |
3,425 | 2,377 | ||||||
Senior Secured Line of Credit and Long-Term Debt |
69,132 | 251 | ||||||
8.875% Senior Notes Due 2020 |
350,000 | 350,000 | ||||||
6.25% Senior Notes Due 2022 |
325,000 | 325,000 | ||||||
Premium on Senior Notes, Net |
2,442 | 2,725 | ||||||
Other Deposits and Liabilities |
3,372 | 4,018 | ||||||
Future Abandonment Cost |
40,745 | 38,146 | ||||||
|
|
|
|
|||||
Total Liabilities |
$ | 887,710 | $ | 870,348 | ||||
Stockholders Equity |
||||||||
Preferred Stock, $.001 par value per share, 100,000 shares authorized and 16,100 issued and outstanding on September 30, 2015 and December 31, 2014 |
$ | 1 | $ | 1 | ||||
Common Stock, $.001 par value per share, 100,000,000 shares authorized and 54,975,151 shares issued and outstanding on September 30, 2015 and 54,174,763 shares issued and outstanding on December 31, 2014 |
54 | 54 | ||||||
Additional Paid-In Capital |
622,245 | 617,826 | ||||||
Accumulated Deficit |
(363,235 | ) | (90,749 | ) | ||||
|
|
|
|
|||||
Rex Energy Stockholders Equity |
259,065 | 527,132 | ||||||
Noncontrolling Interests |
| 4,241 | ||||||
|
|
|
|
|||||
Total Stockholders Equity |
259,065 | 531,373 | ||||||
|
|
|
|
|||||
Total Liabilities and Owners Equity |
$ | 1,146,775 | $ | 1,401,721 | ||||
|
|
|
|
REX ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in Thousands, Except per Share Data)
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
OPERATING REVENUE |
||||||||||||||||
Oil, Natural Gas and NGL Sales |
$ | 37,565 | $ | 73,448 | $ | 137,437 | $ | 227,650 | ||||||||
Other Revenue |
8 | 18 | 30 | 92 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
TOTAL OPERATING REVENUE |
37,573 | 73,466 | 137,467 | 227,742 | ||||||||||||
OPERATING EXPENSES |
||||||||||||||||
Production and Lease Operating Expense |
30,616 | 27,674 | 90,310 | 69,338 | ||||||||||||
General and Administrative Expense |
5,376 | 9,288 | 23,507 | 27,179 | ||||||||||||
(Gain) Loss on Disposal of Assets |
(230 | ) | 174 | (465 | ) | 468 | ||||||||||
Impairment Expense |
139,810 | | 264,677 | 41 | ||||||||||||
Exploration Expense |
807 | 1,462 | 2,242 | 4,890 | ||||||||||||
Depreciation, Depletion, Amortization and Accretion |
27,124 | 26,375 | 82,788 | 66,454 | ||||||||||||
Other Operating Expense (Income) |
183 | (24 | ) | 5,304 | 3 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
TOTAL OPERATING EXPENSES |
203,686 | 64,949 | 468,363 | 168,373 | ||||||||||||
INCOME (LOSS) FROM OPERATIONS |
(166,113 | ) | 8,517 | (330,896 | ) | 59,369 | ||||||||||
OTHER EXPENSE |
||||||||||||||||
Interest Expense |
(11,886 | ) | (10,946 | ) | (36,097 | ) | (25,236 | ) | ||||||||
Gain on Derivatives, Net |
28,649 | 12,316 | 45,487 | 2,315 | ||||||||||||
Other Income |
20 | 3 | 119 | 20 | ||||||||||||
Loss on Equity Method Investments |
| (202 | ) | (411 | ) | (610 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
TOTAL OTHER INCOME (EXPENSE) |
16,783 | 1,171 | 9,098 | (23,511 | ) | |||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX |
(149,330 | ) | 9,688 | (321,798 | ) | 35,858 | ||||||||||
Income Tax (Expense) Benefit |
20,037 | (4,069 | ) | 20,653 | (13,839 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS |
(129,293 | ) | 5,619 | (301,145 | ) | 22,019 | ||||||||||
Income From Discontinued Operations, Net of Income Taxes |
34,617 | 970 | 38,149 | 3,963 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
NET INCOME (LOSS) |
(94,676 | ) | 6,589 | (262,996 | ) | 25,982 | ||||||||||
Net Income (Loss) Attributable to Noncontrolling Interests |
(1 | ) | 895 | 2,245 | 3,340 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO REX ENERGY |
(94,675 | ) | 5,694 | (265,241 | ) | 22,642 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Preferred Stock Dividends |
2,415 | | 7,245 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS |
$ | (97,090 | ) | $ | 5,694 | (272,486 | ) | $ | 22,642 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Earnings per common share: |
||||||||||||||||
Basic Net Income (Loss) From Continuing Operations Attributable to Rex Energy Common Shareholders |
$ | (2.44 | ) | $ | 0.11 | $ | (5.74 | ) | $ | 0.41 | ||||||
Basic Net Income From Discontinued Operations Attributable to Rex Energy Common Shareholders |
0.64 | 0.00 | 0.67 | 0.01 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic Net Income (Loss) Attributable to Rex Energy Common Shareholders |
$ | (1.80 | ) | $ | 0.11 | $ | (5.07 | ) | $ | 0.42 | ||||||
Basic Weighted Average Shares of Common Stock Outstanding |
53,936 | 53,214 | 53,748 | 53,493 | ||||||||||||
Diluted Net Income (Loss) From Continuing Operations Attributable to Rex Energy Common Shareholders |
$ | (2.44 | ) | $ | 0.10 | $ | (5.74 | ) | $ | 0.40 | ||||||
Diluted Net Income From Discontinued Operations Attributable to Rex Energy Common Shareholders |
0.64 | 0.00 | 0.67 | 0.01 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted Net Income (Loss) Attributable to Rex Energy Common Shareholders |
$ | (1.80 | ) | $ | 0.10 | $ | (5.07 | ) | $ | 0.41 | ||||||
Diluted Weighted Average Shares of Common Stock Outstanding |
53,936 | 57,991 | 53,748 | 55,254 |
REX ENERGY CORPORATION
CONSOLIDATED OPERATIONAL HIGHLIGHTS
UNAUDITED
Three Months Ending | Nine Months Ending | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Oil, Natural Gas, NGL and Ethane sales (in thousands): |
||||||||||||||||
Oil and condensate sales |
$ | 10,754 | $ | 27,547 | $ | 38,350 | $ | 75,407 | ||||||||
Natural gas sales |
18,684 | 24,883 | 68,057 | 97,381 | ||||||||||||
Natural gas liquid sales (C3+) |
5,069 | 19,136 | 24,872 | 52,895 | ||||||||||||
Ethane sales |
3,058 | 1,883 | 6,158 | 1,967 | ||||||||||||
Cash-settled derivatives: |
||||||||||||||||
Crude oil |
2,694 | (194 | ) | 8,806 | (1,622 | ) | ||||||||||
Natural gas |
8,911 | 2,798 | 23,250 | (1,544 | ) | |||||||||||
Natural gas liquids (C3+) |
3,399 | 399 | 6,939 | (1,044 | ) | |||||||||||
Ethane |
47 | | 172 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total oil, gas, NGL and Ethane sales including cash settled derivatives |
$ | 52,616 | $ | 76,452 | $ | 176,604 | $ | 223,440 | ||||||||
Production during the period: |
||||||||||||||||
Oil and condensate (Bbls) |
268,775 | 306,088 | 891,054 | 808,357 | ||||||||||||
Natural gas (Mcf) |
10,731,248 | 9,846,693 | 34,160,329 | 25,681,687 | ||||||||||||
Natural gas liquids (C3+) (Bbls) |
498,256 | 411,655 | 1,571,358 | 1,042,378 | ||||||||||||
Ethane (Bbls) |
423,478 | 242,557 | 903,086 | 256,505 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total (Mcfe)1 |
17,874,302 | 15,608,493 | 54,353,317 | 38,325,127 | ||||||||||||
Production average per day: |
||||||||||||||||
Oil and condensate (Bbls) |
2,921 | 3,327 | 3,264 | 2,961 | ||||||||||||
Natural gas (Mcf) |
116,644 | 107,029 | 125,129 | 94,072 | ||||||||||||
Natural gas liquids (C3+) (Bbls) |
5,416 | 4,475 | 5,756 | 3,818 | ||||||||||||
Ethane (Bbls) |
4,603 | 2,636 | 3,308 | 940 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total (Mcfe)a |
194,286 | 169,658 | 199,096 | 140,385 | ||||||||||||
Average price per unit: |
||||||||||||||||
Realized crude oil price per Bbl as reported |
$ | 40.01 | $ | 90.00 | $ | 43.04 | $ | 93.28 | ||||||||
9Realized impact from cash settled derivatives per Bbl |
10.02 | (0.64 | ) | 9.88 | (2.01 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net realized price per Bbl |
$ | 50.03 | $ | 89.36 | $ | 52.92 | $ | 91.28 | ||||||||
Realized natural gas price per Mcf as reported |
$ | 1.74 | $ | 2.53 | $ | 1.99 | $ | 3.79 | ||||||||
Realized impact from cash settled derivatives per Mcf |
0.83 | 0.28 | 0.68 | (0.06 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net realized price per Mcf |
$ | 2.57 | $ | 2.81 | $ | 2.67 | $ | 3.73 | ||||||||
Realized natural gas liquids (C3+) price per Bbl as reported |
$ | 10.17 | $ | 46.49 | $ | 15.83 | $ | 50.74 | ||||||||
Realized impact from cash settled derivatives per Bbl |
6.82 | 0.96 | 4.42 | (1.00 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net realized price per Bbl |
$ | 16.99 | $ | 47.45 | $ | 20.25 | $ | 49.74 | ||||||||
Realized ethane price per Bbl as reported |
$ | 7.22 | $ | 7.76 | $ | 6.82 | $ | 7.67 | ||||||||
Realized impact from cash settled derivatives per Bbl |
0.11 | | 0.19 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net realized price per Bbl |
$ | 7.33 | $ | 7.76 | $ | 7.01 | $ | 7.67 | ||||||||
LOE/Mcfe |
$ | 1.71 | $ | 1.77 | $ | 1.66 | $ | 1.81 | ||||||||
Cash G&A/Mcfe |
$ | 0.31 | $ | 0.50 | $ | 0.34 | $ | 0.60 |
1 | Oil and natural gas liquids are converted at the rate of one barrel of oil equivalent to six Mcfe. |
REX ENERGY CORPORATION
COMMODITY DERIVATIVES HEDGE POSITION AS OF 11/9/2015
2015 | 2016 | |||||||
Oil Derivatives (Bbls) |
||||||||
Collar Contracts |
||||||||
Volume |
50,000 | 60,000 | ||||||
Ceiling |
$ | 63.15 | $ | 63.81 | ||||
Floor |
$ | 52.90 | $ | 53.75 | ||||
Collar Contracts with Short Puts |
||||||||
Volume |
100,000 | 45,000 | ||||||
Ceiling |
$ | 72.50 | $ | 70.00 | ||||
Floor |
$ | 65.00 | $ | 65.00 | ||||
Short Put |
$ | 50.00 | $ | 50.00 | ||||
Put Spread Contracts |
||||||||
Volume |
| 120,000 | ||||||
Floor |
$ | | $ | 65.00 | ||||
Short Put |
$ | | $ | 50.00 | ||||
Natural Gas Derivatives (Mcf) |
||||||||
Swap Contracts |
||||||||
Volume |
3,500,000 | (1) | 13,200,000 | (2) | ||||
Price |
$ | 3.82 | $ | 3.63 | ||||
Swaption Contracts |
||||||||
Volume |
200,000 | 1,200,000 | ||||||
Price |
$ | 3.50 | $ | 3.15 | ||||
Put Spread |
||||||||
Volume |
| 2,100,000 | ||||||
Floor |
$ | | $ | 3.00 | ||||
Short Put |
$ | | $ | 2.25 | ||||
Collar Contracts |
||||||||
Volume |
| 3,900,000 | ||||||
Ceiling |
$ | | $ | 3.32 | ||||
Floor |
$ | | $ | 2.82 | ||||
Collar Contracts with Short Puts |
||||||||
Volume |
2,000,000 | 19,170,000 | ||||||
Ceiling |
$ | 4.35 | $ | 3.99 | ||||
Floor |
$ | 3.59 | $ | 3.22 | ||||
Short Put |
$ | 2.90 | $ | 2.51 | ||||
Call Contracts |
||||||||
Volume |
400,000 | | ||||||
Ceiling |
$ | 4.40 | $ | | ||||
Natural Gas Liquids (Bbls) |
||||||||
Swap Contracts |
||||||||
Propane (C3) |
||||||||
Volume |
166,000 | 639,000 | ||||||
Price |
$ | 26.04 | $ | 23.10 | ||||
Butane (C4) |
||||||||
Volume |
24,000 | 108,000 | ||||||
Price |
$ | 28.90 | 30.62 | |||||
Isobutane (IC4) |
||||||||
Volume |
11,000 | 60,000 | ||||||
Price |
$ | 29.57 | $ | 30.70 | ||||
Natural Gasoline (C5+) |
||||||||
Volume |
57,000 | 324,000 | ||||||
Price |
$ | 50.78 | $ | 52.79 | ||||
Ethane |
||||||||
Volume |
68,300 | 240,000 | ||||||
Price |
$ | 8.40 | $ | 8.82 | ||||
Natural Gas Basis (Mcf) |
||||||||
Swap Contracts |
||||||||
Dominion Appalachia(3) |
||||||||
Volume |
1,320,000 | 16,630,000 | ||||||
Price |
$ | (0.83 | ) | $ | (0.94 | ) |
(1) | Includes 1.3 Bcf of enhanced swaps |
(2) | Includes 3.6 Bcf of enhanced swaps |
(3) | Financial derivatives only |
APPENDIX
REX ENERGY CORPORATION
NON-GAAP MEASURES
EBITDAX
EBITDAX means, for any period, the sum of net income for such period plus the following expenses, charges or income to the extent deducted from or added to net income in such period: interest, income taxes, DD&A, unrealized losses from financial derivatives, non-recurring gains and losses, exploration expenses and other similar non-cash charges, minus all non-cash income, including but not limited to, income from unrealized financial derivatives and gains on asset dispositions, added to net income. EBITDAX, as defined above, is used as a financial measure by our management team and by other users of its financial statements, such as our commercial bank lenders to analyze such things as:
| Our operating performance and return on capital in comparison to those of other companies in our industry, without regard to financial or capital structure; |
| The financial performance of our assets and valuation of the entity without regard to financing methods, capital structure or historical cost basis; |
| Our ability to generate cash sufficient to pay interest costs, support our indebtedness and make cash distributions to our stockholders; and |
| The viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities. |
EBITDAX is not a calculation based on GAAP financial measures and should not be considered as an alternative to net income (loss) (the most directly comparable GAAP financial measure) in measuring our performance, nor should it be used as an exclusive measure of cash flows, because it does not consider the impact of working capital growth, capital expenditures, debt principal reductions, and other sources and uses of cash, which are disclosed in our consolidated statements of cash flows.
We have reported EBITDAX because it is a financial measure used by our existing commercial lenders, and because this measure is commonly reported and widely used by investors as an indicator of a companys operating performance and ability to incur and service debt. You should carefully consider the specific items included in our computations of EBITDAX. While we have disclosed EBITDAX to permit a more complete comparative analysis of our operating performance and debt servicing ability relative to other companies, you are cautioned that EBITDAX as reported by us may not be comparable in all instances to EBITDAX as reported by other companies. EBITDAX amounts may not be fully available for managements discretionary use, due to requirements to conserve funds for capital expenditures, debt service and other commitments.
We believe that EBITDAX assists our lenders and investors in comparing our performance on a consistent basis without regard to certain expenses, which can vary significantly depending upon accounting methods. Because we may borrow money to finance our operations, interest expense is a necessary element of our costs. In addition, because we use capital assets, DD&A are also necessary elements of our costs. Finally, we are required to pay federal and state taxes, which are necessary elements of our costs. Therefore, any measures that exclude these elements have material limitations.
To compensate for these limitations, we believe it is important to consider both net income determined under GAAP and EBITDAX to evaluate our performance.
For purposes of consistency with current calculations, we have revised certain amounts relating to prior period EBITDAX. The following table presents a reconciliation of our net income to EBITDAX for each of the periods presented.
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Income (Loss) From Continuing Operations |
$ | (129,293 | ) | $ | 5,619 | $ | (301,145 | ) | $ | 22,019 | ||||||
Gain on Derivatives, Net |
(28,649 | ) | (12,316 | ) | (45,487 | ) | (2,315 | ) | ||||||||
Cash Settlement of Derivatives |
15,082 | 3,002 | 40,102 | (3,331 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Less Gain from Financial Derivatives |
(13,567 | ) | (9,314 | ) | (5,385 | ) | (5,646 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Add Back Non-Recurring Costs1 |
| | 4,774 | | ||||||||||||
Add Back Depletion, Depreciation, Amortization and Accretion |
27,124 | 26,375 | 82,788 | 66,454 | ||||||||||||
Add Back (Less) Non-Cash Compensation Expense (Income) |
(83 | ) | 1,521 | 4,834 | 4,245 | |||||||||||
Add Back Interest Expense |
11,886 | 10,946 | 36,097 | 25,236 | ||||||||||||
Add Back Impairment Expense |
139,810 | | 264,677 | 41 | ||||||||||||
Add Back Exploration Expenses |
807 | 1,462 | 2,242 | 4,890 | ||||||||||||
Add Back (Less) Loss (Gain) on Disposal of Assets |
(230 | ) | 174 | (465 | ) | 468 | ||||||||||
Add Back (Less) Income Tax Expense (Benefit) |
(20,037 | ) | 4,069 | (20,653 | ) | 13,839 | ||||||||||
Add Back Non-Cash Portion of Equity Method Investment |
| 201 | 406 | 603 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
EBITDAX From Continuing Operations |
$ | 16,417 | $ | 41,053 | $ | 68,170 | $ | 132,149 | ||||||||
Income From Discontinued Operations, Net of Income Taxes |
34,617 | 970 | 38,149 | 3,963 | ||||||||||||
Net (Income) Loss Attributable to Noncontrolling Interests |
1 | (895 | ) | (2,245 | ) | (3,340 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Income From Discontinued Operations Attributable to Rex Energy |
34,618 | 75 | 35,904 | 623 | ||||||||||||
Add Back Depletion, Depreciation, Amortization and Accretion |
2 | 989 | 78 | 2,560 | ||||||||||||
Add Back Interest Expense |
56 | 134 | 487 | 482 | ||||||||||||
Less Gain on Disposal of Assets2 |
(57,013 | ) | (91 | ) | (57,055 | ) | (84 | ) | ||||||||
Less Non-Cash Portion of Noncontrolling Interests |
(23 | ) | (410 | ) | (209 | ) | (1,184 | ) | ||||||||
Add Back Income Tax Expense |
22,452 | 400 | 23,310 | 754 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Add EBITDAX From Discontinued Operations |
$ | 92 | $ | 1,097 | $ | 2,515 | $ | 3,151 | ||||||||
EBITDAX (Non-GAAP) |
$ | 16,509 | $ | 42,150 | $ | 70,685 | $ | 135,300 | ||||||||
|
|
|
|
|
|
|
|
1 | Non-Recurring costs for the nine months ended September 30, 2015 are due to net fees incurred to terminate two drilling rig contracts earlier than their original term. |
2 | Gain on disposal included in EBITDAX from Discontinued Operations for the three and nine months ended September 30, 2015, includes approximately $57.0 million in gains recognized on the sale of Water Solutions Holdings, LLC. |
Adjusted Net Income
Adjusted Net Income means, for any period, the sum of net income (loss) from continuing operations before income taxes for the period plus the following expenses, charges or income, in each case, to the extent deducted from or added to net income in the period: unrealized losses from financial derivatives, non-cash compensation expense, dry hole expenses, disposals of assets, impairment and other one-time or non-recurring charges, minus all gains from unrealized financial derivatives, disposal of assets and deferred income tax benefits, added to net income. Adjusted Net Income is used as a financial measure by Rex Energys management team and by other users of its financial statements, to analyze its financial performance without regard to non-cash deferred taxes and non-cash unrealized losses or gains from oil and gas derivatives. Adjusted Net Income is not a calculation based on GAAP financial measures and should not be considered as an alternative to net income (loss) in measuring the companys performance.
Rex Energy reports Adjusted Net Income because it believes that this measure is commonly reported and widely used by investors as an indicator of a companys operating performance. You should carefully consider the specific items included in the companys computation of this measure. You are cautioned that Adjusted Net Income as reported by Rex Energy may not be comparable in all instances to that reported by other companies.
To compensate for these limitations, the company believes it is important to consider both net income determined under GAAP and Adjusted Net Income.
The following table presents a reconciliation of Rex Energys net income from continuing operations to its adjusted net income for each of the periods presented ($ in thousands):
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Income (Loss) From Continuing Operations Before Income Taxes, as reported |
$ | (149,330 | ) | $ | 9,688 | $ | (321,798 | ) | $ | 35,858 | ||||||
(Gain) on Derivatives, Net |
(28,649 | ) | (12,316 | ) | (45,487 | ) | (2,315 | ) | ||||||||
Cash Settlement of Derivatives |
15,082 | 3,002 | 40,102 | (3,331 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Less Gains from Financial Derivatives |
(13,567 | ) | (9,314 | ) | (5,385 | ) | (5,646 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Add Back Non-Recurring Costs1 |
| | 4,774 | | ||||||||||||
Add Back Impairment Expense |
139,810 | | 264,677 | 41 | ||||||||||||
Add Back Dry Hole Expense |
179 | 159 | 468 | 311 | ||||||||||||
Add Back (Less) Non-Cash Compensation Expense (Income) |
(83 | ) | 1,521 | 4,834 | 4,245 | |||||||||||
Add Back (Less) (Gain) Loss on Disposal of Assets |
(230 | ) | 174 | (465 | ) | 468 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (Loss) Before Income Taxes, adjusted |
$ | (23,221 | ) | $ | 2,228 | $ | (52,895 | ) | $ | 35,277 | ||||||
Less Income Tax (Expense) Benefit, adjusted2 |
9,288 | (891 | ) | 21,158 | (14,111 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted Net Income (Loss) |
$ | (13,933 | ) | $ | 1,337 | $ | (31,737 | ) | $ | 21,166 | ||||||
Basic Adjusted Net Income (Loss) Per Share |
$ | (0.26 | ) | $ | 0.03 | $ | (0.59 | ) | $ | 0.40 | ||||||
|
|
|
|
|
|
|
|
|||||||||
Basic Weighted Average Shares of Common Stock Outstanding |
1 | Non-Recurring costs for the nine months ended September 30, 2015 are due to net fees incurred to terminate to drilling rig contracts earlier than their original term |
2 | Assumes an effective tax rate of 40% |
Cash General and Administrative Expenses
Cash General and Administrative Expenses (Cash G&A) is the difference between GAAP G&A and non-Cash G&A, which is primarily comprised of non-cash compensation expense. Rex Energy has reported Cash G&A because it believes that this measure is commonly reported and widely used by management and investors as an indicator of overhead efficiency without regard to non-cash expenditures, such as stock compensation. Cash G&A is not a calculation based on GAAP financial measures and should not be considered as an alternative to GAAP G&A in measuring the companys performance. You should carefully consider the specific items included in the companys computation of this measure. You are cautioned that Cash G&A as reported by Rex Energy may not be comparable in all instances to that reported by other companies.
To compensate for these limitations, the company believes it is important to consider both Cash G&A and GAAP G&A. The following table presents a reconciliation of Rex Energys GAAP G&A to its Cash G&A for each of the periods presented (in thousands):
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
GAAP G&A |
$ | 5,376 | $ | 9,288 | $ | 23,507 | $ | 27,179 | ||||||||
Non-Cash Compensation Expense |
83 | (1,521 | ) | (4,834 | ) | (4,245 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash G&A |
$ | 5,459 | $ | 7,767 | $ | 18,673 | $ | 22,934 |
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Canon U.S.A., Inc. Hosts First-Ever Recognition Week, Celebrating Employees’ Hard Work and Dedication
- Blue Line Protection Group Provides Financial Review
- 4 Tips for Flawless Summer-Ready Skin
Create E-mail Alert Related Categories
SEC FilingsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!